one middle class family's experiences living in a shack in Mamelodi

WWYD: What Would You Do?

Elena was the name of a lady we met on the streets of Phomolong Ext 6 while going on an exploratory family walk this morning.

She is a tailor by trade and was recently awarded a contract of R115 000 by the Department of Social Development to make just over 300 uniforms for learners of a Mamelodi school. Each uniform comprises of a jersey, skirt and socks.

Elena gets a 30% upfront fee to support operating costs. She has used this to buy material from Joburg and some labour costs.

Challenge is this. With 80 uniforms completed she has run out of money to pay her employees. She is now feeling very stressed and no bank would offer her a loan. The local micro lenders charge 50% interest per month. She needs R10 000 to cover this operational gap.

Sounds a bit like one of those tricky interview questions but for Elena, this is a real life challenge.

15 comments

I would give her all the advice I can based on what I know etc. I would look at different options available to her etc. Do not feel itchy now and start giving out money, remember that there you are like every citizen…True friendships should be build not from money.

I will not be surprised if the poor Elena had in the end to share that R115 000 with some government official thanking him/her to have been awarded the contract.Perhaps Elena could try to engage the suppliers using the guarantee letter from Govt to which i dont think they would be interested in entering into such a risky agreement to issue their products for free but defintly i believe the employees would not mind or have any option considering that could be their only job ever. So they are likely to continue working save the unavailability of materials

Not living in your country, I don’t know how it operates, but can Elena bundle the order into several shipments, receive payment for the 80 completed uniforms and use that to pay her remaining labor needs? If that is not possible, she will have to ask her employees to take a deferred payment, or to try to finish the job with fewer employees. It’s a tough situation to be in, and maybe next time she can negotiate the contract based on more accurate materials and labor costs.

I agree with the other commentors. Her employees should understand her predicament. She has told them that she’s run out of cash right?
You mention that she can no longer pay them. Can she afford to order materials to complete the job? They must be patient and wait until the money is received.

Congratulations on this experience by the way. I’m a big reality tv addict and wish you had cameras following you throughout – but then that wouldn’t make it normal.

Having grown up in the fabric industry, and doing some calculations, she should have spent R22000 for 80 uniforms. Seems that like so many other new entrepreneurs in this space she needs help with negotiating for a bigger deposit, multiple deliveries, budgeting and help with getting the correct CMT (cut,make and trim) costs. Many fail with the CMT bit by paying wages per day instead of on output. Like Elena, we have met many others who have ended up in a similar predicament.

Instead of only providing cash and contracts more needs to be done to help entrepreneurs with business management.

She should look for someone who would want to invest in her business, she could entice a potential investor by offering a guaranteed above market return. This would be cheaper than going to money lenders.

Apologies that there has been little traction with Elena’s story. It turns out that when we met her, she was helping out a friend with some washing following an event. Both Elena and her friend did not live at the shack where we met them and her neighbours have not been able to supply us with either her or her friend Nthabiseng’s mobile number. I did also ask Elena to visit our shack with all her paper work so I could review her agreement but she did not do so. I am still trying to track her down and will update you if I have managed to do so